September 2014 OECD Employment Outlook 2014

How does GERMANY compare?
September 2014
OECD Employment Outlook 2014
The 2014 edition of the OECD Employment Outlook reviews recent labour
market trends and short-term prospects in OECD and key emerging
economies. It zooms in on how the crisis has affected earnings, provides
country comparisons of job quality, examines the causes and consequences
of non-regular employment, and estimates the impact of qualifications and
skills on labour market outcomes.
For further information: www.oecd.org/employment/outlook
DOI: 10.1787/empl_outlook-2014-en
Germany’s labour market continues to
perform well in comparison with other
major developed economies
training and in-work support measures for the
long-term unemployed who experience a range
of difficulties in finding jobs.
In Germany, employment continues to grow and
the employment rate is now among the highest
in the OECD (73.4% in the first quarter of 2014).
Consequently, unemployment has fallen to 5.1%
(ILO definition) in the second quarter of 2014 well below the OECD average of 7.4% and less
than half of the Euro area’s average at 11.6%.
According to the 2014 OECD Employment
Outlook, the unemployment rate will decline
further in 2015 and Germany looks set to join the
small group of OECD countries with
unemployment rates below 5%.
Percentage of total unemployment
Despite the decline in unemployment,
long-term unemployment remains high
Since the start of the crisis Germany recorded the
sharpest reduction across the OECD in the share
of all unemployed who are long-term
unemployed (for 12 months or more) although
this share remains almost 10 percentage points
above the OECD average. The incidence of longterm unemployment is of particular concern
because of the hardship it imposes for the
individuals concerned and their families as well
as potentially contributing to the consolidation
of structural unemployment. However, many of
the long-term unemployed are low-skilled and
do not match employers’ demands and are
most likely to drop out of the labour force.
Germany should therefore give priority to
programmes like “Perspektive in Betrieben”,
providing targeted wage subsidies, counselling,
OECD Employment Outlook 2014
How does GERMANY compare? © OECD September 2014
Last updated:17-Nov-2014
Incidence of long-term unemployment
%
60
Start of the crisis (Q4 2007)
Country-specific peak
Current value (Q1 2014)
50
40
30
20
Germany
OECD
Euro area
Note: OECD is the weighted average of 33 OECD countries
excluding Chile.
Source: OECD calculations based on quarterly national
Labour Force Surveys.
Overall Germany performs well in terms
of job quality, but lags behind for the
quality of the working environment
A focus on purely quantitative labour market
aspects, however, neglects job quality. People
spend most of their day and a significant part
of their life at work. Therefore, job quality is a
key determinant of well-being. The 2014 OECD
Employment Outlook paints a broad picture of
job quality across OECD countries. This is based
on three dimensions that are considered as
essential aspects of good-quality jobs: earnings
quality (the level of earnings and degree of
inequality); labour market security (risk of job
loss and income support available); and quality
of the working environment (work demands
1
and conditions, and the resources and support
available to cope with these demands).
Compared to other OECD countries, Germany
performs well above average in two of these
three dimensions. Germany does well in terms
of the index of earnings quality as average
earnings are among the highest across the
OECD and earnings inequality is comparably
low, although not as low as in the Nordic
countries or in Belgium, the Netherlands and
Switzerland. Germany also does well in terms
of labour market security because of a
relatively low risk of unemployment by
OECD standards and a welfare system that
provides unemployed workers and their
families with an effective income safety net.
Job quality (2010)
Germany
Index (0-1)
From low to high performance
OECD median
1
The introduction of a national minimum
wage will help underpin the wages of
low-paid workers
There has been considerable wage moderation
in Germany even prior to the crisis and despite
falling unemployment. In contrast, in many
other OECD countries, it was only after the
start of the crisis that real wage growth slowed
considerably and in some cases real wages fell.
In some of the Euro-area countries this has
helped restore external competitiveness.
However, further wage cuts could be difficult
to achieve and may risk increasing the number
of working poor and dampening consumer
demand.
Wage developments in Germany
a
Real hourly wage, base 100 in 2000
110
0.8
105
0.6
Germany
OECD (b)
Euro area
0.4
100
0.2
0
Earnings
quality
Labour
market
security
Quality of
the working
environment
Source: OECD Employment Outlook, 2014.
However, Germany falls below the
OECD average in terms of the OECD’s index for
the quality of the working environment. In
2010, 19% of German workers report difficult
and stressful working conditions. This is more
than double the proportion reported for
Denmark and the Netherlands (9%). Workers in
these types of jobs are more likely to suffer
from physical and mental health problems. In
Europe, the 2014 OECD Employment Outlook
shows that 50% of persons who face poor
working conditions report that their work
impairs their health, compared with only 20%
among those with better working conditions.
And a poor work environment is also estimated
to increase sickness absence by 40%.
95
a) Total compensation of employees divided by total
hours worked by employees in real terms.
b) OECD is the weighted average of 26 OECD countries.
Source: OECD calculations based on quarterly national
accounts.
The introduction of a national minimum wage
in Germany will help boost the wages of
low-paid workers and reduce the number of
working poor. At € 8.50, it would amount to
about half of the median full-time wage,
similar to the ratio for Belgium, the
Netherlands and the United Kingdom, but
below the ratio for France. It will be important
to carefully evaluate the impact of the
minimum wage on employment and living
standards, particularly for low-skilled and
inexperienced workers.
OECD Employment Outlook 2014 is available to journalists on the password-protected website or on request
from the Media Relations Division. For further comment on Germany, journalists are invited to contact Mark
Keese
(+33 1 45 24 8794;
[email protected])
or
Kristine
Langenbucher
(+33 1 45 24 1837;
[email protected]) from the OECD Employment Analysis and Policy Division.
OECD Employment Outlook 2014
How does GERMANY compare? © OECD September 2014
Last updated:17-Nov-2014
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